A dispute over transfer of shares in unlisted property company USC Investments Ltd is the very tip of an iceberg; the frigid relationship between Lani Hagaman widow of the late Earl Hagaman and Keith Hagaman, Earl’s son from an earlier relationship. Lani was penalised with increased court costs over delays in finalising Keith’s restructuring of his USC shareholding.
The High Court was told there is a hostile relationship between widow Lani and stepson Keith over resolution of Earl Hagaman’s estate. Earl died in 2017, aged 91.
USC Investments Ltd is a property investment company set up by Keith and his father in 2004, with Keith coming to have a fifty per cent shareholding through a company called Miramar Consolidated Ltd. Keith lives in California. Miramar is ultimately controlled though a Cook island discretionary trust.
On Earl’s death, Lani came to control the other fifty per cent of USC Investments. She proved to be obstructive when in 2020 Keith sought to rationalise his USC shareholding.
As required by USC’s constitution, Keith gave notice to Lani as fellow shareholder that he was looking to sell, offering his fifty per cent stake at $850,000. She quibbled over the validity of the notice. A new notice was issued. USC’s constitution allowed three months for her to buy or to find a buyer of her choice at that price. Otherwise Keith was free to sell elsewhere. After waiting three months, she said she didn’t want to buy. Keith nominated himself as buyer of his Miramar shareholding, at a price of $2.5 million. USC’s registration of the share transfer was put on hold, with an explanation demanded of the price. It was insinuated that Keith may be party to some deal in breach of money-laundering legislation. Keith explained the $2.5 million share price was a ‘wash-up’ figure making allowance for debts owed him by Miramar. Still registration of the share transfer was delayed; supposedly because of what was an innocuous Bank of New Zealand request to USC about the status of Keith’s Cook Island discretionary trust.
Out of frustration, Keith took steps to have USC wound up on Companies Act grounds that Lani as director was acting oppressively towards Miramar as shareholder. She indicated this High Court action would be defended, before capitulating and allowing Miramar’s fifty per cent shareholding to be transferred to Keith personally.
Associate judge Paulsen ordered Lani and USC Investments pay an increased contribution towards Miramar’s legal costs on its application to windup USC.
Miramar Consolidated Ltd v. USC Investments Ltd – High Court (20.6.23)
23.097
Post judgment note: In August 2023, Keith’s fifty per cent shareholding in USC Investments was transferred to Lani Hagaman and he resigned as USC director.